Exponential growth

Cache Landing · Jan 19, 2006

Quote from Neoxx:

Forgetting credit spreads for the time being....

Purely directional play, INFY and GME, fading the gap, how would you play this?

For INFY I would wait till it crosses above $75. During this past year, $75 proved to be strong resistance several times (August-November). Now that they got knocked down so far, it might become resistance again. If they cross above that on a good move then they might fade the gap. Just remember that they are still below both the 20- and 50-day MA which makes me nervous a lot of times. If fading the gap, buy the APR 70 calls. Profit target at $78. Stop loss below $72.

For GME, they are either hitting resistance again right now, or just taking a breather. If I was wanting to fade the gap I would buy the APR 40 puts. Stop loss when the underlying crosses $40. If it is resistance that it is hitting then it will likely be knocked down to the $35 level where it will find support. I would use that as a profit target.

Cache Landing · Jan 19, 2006

Quote from Cache Landing:

Uh...Ohhhh....
Looks like someone might have been wrong about RIMM.

CACHE (raises his hand with a sheepish grin)

I knew I would probably get caught on this trade. It's a good thing I only played half the amount of a normal position.

Good rebound today. I'm up a little bit on RIMM. maybe it was just shaking out some of the weak players.

Neoxx · Jan 19, 2006

Quote from Cache Landing:

For INFY I would wait till it crosses above $75. During this past year, $75 proved to be strong resistance several times (August-November). Now that they got knocked down so far, it might become resistance again. If they cross above that on a good move then they might fade the gap. Just remember that they are still below both the 20- and 50-day MA which makes me nervous a lot of times. If fading the gap, buy the APR 70 calls. Profit target at $78. Stop loss below $72.

For GME, they are either hitting resistance again right now, or just taking a breather. If I was wanting to fade the gap I would buy the APR 40 puts. Stop loss when the underlying crosses $40. If it is resistance that it is hitting then it will likely be knocked down to the $35 level where it will find support. I would use that as a profit target.

Hmm, if I wait until INFY is over 75 and place my stop below 72, how can I avoid violating my 1% rule?

RichardRimes · Jan 19, 2006

Anyone NOT wrong on a trade now and then raise their hand...(it won't be me

)....I got incredibly lucky today on PFE...but am singing the blues on being called out of OLGC ...at 32.5 (up 3 today...like 38 or 39)

Quote from Cache Landing:

Uh...Ohhhh....
Looks like someone might have been wrong about RIMM.

CACHE (raises his hand with a sheepish grin)

I knew I would probably get caught on this trade. It's a good thing I only played half the amount of a normal position.

Cache Landing · Jan 19, 2006

Quote from Neoxx:

Hmm, if I wait until INFY is over 75 and place my stop below 72, how can I avoid violating my 1% rule?

Ahhh.... Sorry, I was in a hurry today and I didn't give that part of your strategy much thought. Let me think it over and get back to you on that aspect.

Cache Landing · Jan 20, 2006

Quote from DonnaV:

Anyone NOT wrong on a trade now and then raise their hand...(it won't be me)....I got incredibly lucky today on PFE...but am singing the blues on being called out of OLGC ...at 32.5 (up 3 today...like 38 or 39)

Yeah, all part of the game I guess. But ya know..... as much as I say "just chalk that loss up to the nature of the game", it never really makes me feel better about having been wrong.

I had to take profits on my COF spread today. I was a bit disappointed because I had a potential gain of 90% but the earnings report got me this morning. I ended up settling for a 30% gain. Oh well, I've got available funds now, anyone know of any stocks that are right next to support/resistance?

ChrisM · Jan 20, 2006

Quote from Neoxx:

Just a simple hypothetical for all the option veterans on the forum...

If someone had a sound understanding of -

1) Risk management
2) Technical analysis
3) Options

(let me just add that I don't qualify for the above!)

- would it be a reasonable expectation to grow your trading capital by 50% over a 3 month period, consistently, swing trading equity options?

If so, how many years might it reasonably take to achieve this level of proficiency?

I realise these are completely speculative questions, but please humour me.

Thanks,
Neoxx

I am CTA trading exclusively options. About your question - IMHO you would have to accept high risk to achieve such result.
At this point you would not take advantage of options - it would be another risky style of trading.
Options give tremendous opportunity in sense of controlling risk, not skyrocketing returns.

Arnie Guitar · Jan 20, 2006

Quote from Cache Landing:

I hope you keep your enthusiasm. In the end it comes down to who can stay interested enough to keep making money.

That is everything right there, it is a simple statement, but so profound.
My compliments.

With everything else life throws at us, family obligations, etc,
to maintain focus and enthusiasm is difficult.
I find it helpful to take some days off, even though yer thinkin', man, I'm missing some opportunities........
relax, there will always be opportunities.

Thank you, Cache Landing.

Algorithm · Jan 20, 2006

Quote from Cache Landing:

Yeah, all part of the game I guess. But ya know..... as much as I say "just chalk that loss up to the nature of the game", it never really makes me feel better about having been wrong.

I had to take profits on my COF spread today. I was a bit disappointed because I had a potential gain of 90% but the earnings report got me this morning. I ended up settling for a 30% gain. Oh well, I've got available funds now, anyone know of any stocks that are right next to support/resistance?

MO is looking good right now at around the 75 strike just hovering there due to expiration today. Engle court case is still pending and could be announced any Thursday any week now. If favorable (90% probability that it will be) stock should POP nicely to the upper 70's to low 80's in my opinion.

But right now MO is at support levels at mid 70's. MO options have been very, very good to me.

Just my .02 since you asked.

Cache Landing · Jan 20, 2006

Quote from Cache Landing:

Decided to take profits on my DJX play. Not as high as I would've liked, but profit is profit. All said and done I made 40%. I was looking for 110% on this one but I didn't have the nerve to sit through the beige book coming out today. The CPI came in lower than expected already and if the beige book hints at no more tightening in the fed policy, I might get caught with my hand in the cookie jar. Maybe if I'm lucky the beige book will be so good that my long calls will end up being worth something. LOL

Alright. Who forgot to send me the memo that the DOW was going to plunge almost 200 points today? :mad:

Sure would've been nice to still be in.